Government’s SCIC continues flight from cement firms

The State Capital Investment Corporation (SCIC) is selling its entire stake in Saigon Cement Joint Stock Company (SCJ).

The SCIC has announced that it will sell all of its 16.44 per cent holding in the company, or 3.2 million shares, on December 31 for an initial price of VND14,300 (70 US cents) per share, 54 per cent higher than the market price of VND9.300 (43 US cents). The purpose of the sale, according to the SCIC, is to divest from sectors and firms in which the state does not need to hold shares.

The SCIC is currently the biggest shareholder in SCJ, followed by Nguyen Van Bong, SCJ’s general director, with 15.37 per cent. The remaining 68 per cent is held by other shareholders. SCJ has a chartered capital of VND195.1 billion ($9.16 million).

As of June 30, 2014 SCJ’s assets were valued at VND526 billion ($24.7 million), while its total debts amounted to 50.5 per cent of its total assets.

In 2012, due to high financial costs, SCJ reported losses of VND11.9 billion ($560,000). However, in 2013 SCJ achieved profitability again. In the first three quarters of this year the company reported net profit of VND15.4 billion ($723,000).

On September 23 the SCIC finished selling its entire 40 per cent stake in Yen Bai Cement and Minerals Joint Stock Company (YBC), a small cement producer that has been reporting losses for three years and was resultantly delisted.

Masan strengthens its consumer arm

Masan Group Corporation, one of Vietnam’s largest private businesses, yesterday announced a series of corporate initiatives to further strengthen its wholly-owned subsidiary Masan Consumer Holdings.

The move is part of Masan Group’s efforts to continue building and investing in Vietnam’s consumer sector.

Masan Group also announced that together with the new initiatives, Masan Consumer Holdings (MCH) shall have experienced a transformational year where it has emerged as the group’s primary platform to invest further in Vietnam’s consumer opportunities.

The initiatives that have occurred or are expected to be completed in 2014 include becoming sole owner of Masan Group’s interest in Masan Consumer, completing a landmark bond issuance and Entering the beer market.

Accordingly, Masan Group has restructured by consolidating its direct and indirect interests in Masan Consumer into MCH. By the end of 2014, MCH is expected to have further increased its ownership percentage in Masan Consumer.

In early December, MCH completed a landmark 10-year bond issuance, which raised VND2,100 billion at an 8 per cent fixed coupon rate. The bonds are the longest tenure and lowest cost issuance by a private sector company in Vietnam. The bonds are guaranteed by the Credit Guarantee and Investment Facility (“CGIF”), a trust fund of the Asian Development Bank (“ADB”), and is CGIF’s the first deal in Vietnam.

Meanwhile, MCH will become the sole and direct owner of Masan Brewery, which currently produces the Su Tu Trang beer brand. Previously, Masan Brewery was held directly by the Group. As a result, MCH will have another major vertical for growth as beer is a $4 billion consumer category in Vietnam.

In addition, other initiatives that have been announced and/or expected to be completed within 2014 at MCH’s subsidiary, Masan Consumer, include establishing Masan Beverage, Cholimex tender offer and sale of non-strategic assets. Following these initiatives, Masan Consumer has established a new subsidiary to consolidate its non-alcoholic beverage businesses and to better position it to win in the bottled beverage sector; is on track to become a major shareholder in Cholimex, a well-known sauces and condiments company in Vietnam, with brands that have been in the market place for nearly 30 years; and aims to improve its operational focus by divesting a non-strategic subsidiary, Minh Viet Packaging, which produces some of the Group’s packaging materials.

The initiatives outlined for Masan Consumer do not include ongoing M&A discussions. With its best-in-class operating platform, Masan Consumer is a strong position to advance the development of acquired businesses, which it has been able to achieve at Vinacafe and Vinh Hao.

To further sharpen the Group’s focus and demonstrate the role of MCH as a key strategic driver of future growth, Masan Group is in the process of strengthening its cash position by the sale of Masan Agri. The cash is expected to provide the Group with more resources and flexibility to support MCH’s growth and invest in transformational opportunities.

Mekong Capital celebrates a record-breaking year

Given the strong rebound of the economy and growth of investee companies, Vietnam-focused funds management firm Mekong Capital ended a successful year for  2014.

“2014 is the best year for the performance of our investee companies in our 13 year history.  All of the consumer-driven businesses performed well,” said Chris Freund, partner at Mekong Capital.

“In general, consumer markets are growing at attractive rates in Vietnam, especially in the provinces, and there are plenty of growth opportunities for companies that are well managed and that are implementing international best practices,” he added.

MobileWorld can be said to be the most successful investee company of Mekong Capital in 2014. The electronics retailer’s net profit was up 183 per cent in the first eleven months of the year, according to Mekong Capital.

With the opening of 124 new MobileWorld stores and eight Dienmay.com stores nationwide over the course of a year, the company’s market-share in retail of smart phones and tablets currently stands at around 27 per cent of the Vietnam market by value, and around 30 per cent by volume.

In the year of 2014, Mekong Capital also got positive news from An Giang Plant Protection, one of Vietnam’s leading agricultural companies. The Standard Chartered Private Equity (SCPE) announced in October that an investment of $90 million would be made to acquire a significant minority stake in An Giang from VinaCapital. Although Mekong Capital’s Vietnam Azalea Fund was not a seller in this transaction, the result was that its shares were revalued at 4.1x from its original investment from December 2008 and a gross IRR of 30 per cent.

Mekong Capital announced that the Vietnam Azalea Fund has been cooperating closely with SCPE and other shareholders to add value, and empower the company’s transformation from a distributor of crop protection chemicals into a total solutions provider to farmers, and a vertically-integrated rice producer.

Meanwhile, Traphaco has implemented a major transformation in its sales network, by which it now sells 80 per cent of its pharmaceutical products directly to a network of 20,000 pharmacies rather than selling via wholesales or sub-distributors.

“This will lead to significant revenue and profit growth in 2015,” said Freund.

Freund believed Mekong Capital’s framework for adding value called Vision Driven Investing to investee companies was implemental in helping the companies to grow in 2014. Some of the key components of the Vision Driven Investing include aligning with the companies around a clear long-term goal and then partnering together to achieve that goal. Often this involves active use of the third party experts to help introduce best practices.

Although Mekong Capital doesn’t get involved in the management of its investee companies, Freund said the fund management firm “spend a lot of time meeting with our investee companies.”

Based on the positive signals of the economy, including credit growth and low inflation, Freund believed Mekong Capital would continue an excellent year in 2015.

“And if TPP is approved, that will be an additional catalyst for Vietnam’s economic development. Our plans are to launch our next fund very early in 2015 and also to divest at least three of our existing investee companies within 2015,” he added.

Government to invest $47 million in debt-laden steel firm

Thai Nguyen Iron and Steel JSC (TIS) plans to sell 100 million shares at VND10,000 ($0.47) per unit to the State Capital Investment Corporation (SCIC) in the fourth quarter of 2014 and first quarter of 2015.

Tisco products are used in many important national projects. The corporation is expected to receive $47.6 million from the State Capital Investment Corporation to improve production. - Photo tisco.com.vn

If successful, the issuance would bring TIS’ charter capital up to VND2.840 trillion ($133.3 million), 35.2 per cent of which will be contributed by the SCIC and 42.1 per cent by Vietnam Steel Corporation (VNSteel).

Transfer of these shares will be restricted till a year after the issue is concluded and all proceeds will be used for phase 2 of a project to expand TIS’ production.

TIS reported consolidated losses of VND109 million ($5,166) in the first half of 2014, compared to a loss of VND844 million ($40,000) over the same period last year. As of June 30, TIS, with equity of VND1.71 trillion ($81 million), had liabilities of VND7.541 trillion ($357.4 million), of which VND2.2 trillion ($104.2 million) was short-term debts.

The project to expand TIS started in 2007 but has been suspended twice due to capital shortages and unfavourable market developments. The cost for phase two has risen from the initial VND3.843 trillion ($182.1 million) to VND8.104 trillion ($384 million). The value of the partly finished phase two is currently at VND4.330 trillion ($205.2 million), according to the company’s first half financial statement.

Proconco inaugurates latest animal feed plant

Vietnamese-French joint venture Proconco, one of the biggest providers of animal feed in Vietnam, inaugurated a new $9.3 million factory in the central province of Binh Dinh’s Nhon Hoa Industrial Park last week.

The new facility is the company’s seventh in Vietnam and joins the existing two in Dong Nai and other plants in Haiphong, Can Tho, Hung Yen and Hanoi.

Nguyen Thi Le Hong, chairwoman of Proconco said the factory would cover five hectares and produce 150,000 tonnes of product per year. Hong added that in the second phase, the company would invest $18.7 million into doubling its capacity. According to Hong, the new facility will meet the increasing demand for animal feed in central and Central Highlands provinces.

Animal feed companies in Vietnam have faced fierce competition, but Proconco has sold 1.3 million tonnes of products thanks to its model production line.

According to the Vietnam Animal Feed Association, this year the total capacity of animal feed is set to increase 10 per cent compared to the same period last year.

The compound feed industry in Vietnam has grown at a rate of 13-15 per cent annually. Last year, the country produced about 17 million tonnes with 50 foreign-invested companies accounting for 25 per cent of the number of firms, but a gigantic 65-70 per cent market share of the country’s animal feed output. Thailand’s CP Group alone holds a 15 per cent share and Proconco 10 per cent. The total national output is expected to reach 18-20 million tonnes in 2015 and rise to 25-26 million tonnes in 2020.

Last year, Vietnam imported 9.2 million tonnes of animal feed and additives, worth $4.5 billion, up 27.46 per cent on-year. Products imported include protein-rich feed such as soybean, meat and fish powder and energy-rich products such as wheat, corn and bran.

In the first ten months of this year, Vietnam spent $2.79 billion importing animal feed and supplemental foods, up 6.3 per cent on-year, mainly from Argentina (38.4 per cent), the US (12.2 per cent) and China (9 per cent).

Can Tho refinery gets new deadline

The final deadline for the long-delayed Can Tho oil refinery was released last week by the local authorities.

In its latest announcement to Can Tho Oil Refinery Limited, the Can Tho City People’s Committee said that the firm would have its investment certificate revoked if work did not start on the $350 million oil refinery by January 15.

According to Le Manh Tung, deputy director of the Can Tho Municipal Planning and Investment Department, the investor must finish all procedures, such as changing partners, paying a deposit, proving its financial capacity, and negotiating with the contractors prior to this deadline. This is not the first time that the investor in the Can Tho refinery has been threatened with having its investment certificate revoked.

The project was originally  licensed in May 2008 and intended to be developed by the local firm Vien Dong Company in conjunction with the US’ Semtech Limited. This  would have been the largest project in the Mekong  Delta city, with the proposed investment capital of $538 million on a 250 hectare site in Phuoc Thoi ward of O Mon district, and would have boasted the refining capacity of two million tonnes of crude oil per year. However, the project has been delayed since then with several partners being replaced.

Vietnam currently has only one operating oil refinery - the Dung Quat in the central province of Quang Ngai’s Dung Quat Economic Zone. Last week, the Vietnamese government handed over an investment certificate for the expansion of the existing Dung Quat.

With the additional investment capital of $1.8 billion, the Dung Quat oil refinery will be upgraded to the annual refining capacity of 8.5 million tonnes, from the current 6.5 million tonnes of crude oil.

Invested in by the state-run PetroVietnam, the refinery began operating in 2009. Currently, the refinery’s output has helped meet 30 per cent of the domestic demand for a range of petroleum-based products. The refinery is likely to post profits of VND4 trillion ($190 million) this year.

The Vietnamese government has permitted PetroVietnam to either totally invest in the expanded refinery itself, or find a foreign partner to jointly expand the refinery.

PetroVietnam is negotiating with Russian gas and oil giant Gazprom Neft, which has expressed an interest in acquiring a 49 per cent stake in the Dung Quat, but so far no final deal has been reached.

Waste power plant nears go-ahead in Thanh Hoa

Canada’s Naanovo Energy Inc has filed an application for an investment certificate to build a 17 megawatt waste-to-energy plant in the central province of Thanh Hoa.

According to the Thanh Hoa Provincial People’s Committee, executives from Naanovo Energy visited the province in mid-December and discussed the investment with the local authorities.

Under Naanovo Energy’s plan, the company will invest $101 million to build a waste-to-energy plant on a 25-hectare site. The plant will be able to treat 191,700 tonnes of waste a year.

Nguyen Ngoc Hoi, Vice Chairman of the Thanh Hoa Provincial People’s Committee, said the local authorities had already prepared site clearance, water supply and transportation infrastructure for the project. But he noted Naanovo Energy needed to complete the usual administrative procedures and environmental impact assessment to gain an investment certificate.

Established in 2001 in Canada, Naanovo is a global clean energy company with roots in North America. Its purpose is to develop clean energy projects in regions of the world where the demand for energy far exceeds supply and where alternative energy, or clean energy, is the preferred solution for producing electricity. Over the years, Naanovo has expanded operations through concentrated solar power and waste-to-energy projects in the UK, Brazil, El Salvador, Guatemala, Uganda, Nigeria and Saudi Arabia.

If the project in Thanh Hoa is approved, this could be the second waste-to-energy plant in the Vietnam.

The construction of the first waste-to-energy plant in Vietnam began last September in Hanoi. It was built at the Nam Son Waste Treatment Complex in Soc Son district by a joint venture between Japan’s Hitachi Zonen and Hanoi Urban Environment Company. Once completed, the Hanoi waste-to-energy plant will provide the electricity for the whole Nam Son Waste Treatment Complex, as a measure to deal with the glut of waste in the capital.

Several private investors have proposed building renewable energy projects generated from solid waste in the country in recent years, but most of them have not been realised due to the lack of policies that would help guarantee the projects. Those include Australia-based Trisun International Development’s $400 million project and Vietnam Waste Solutions’ $400 million project in Ho Chi Minh City.

To encourage private investors to develop waste-to-energy plants in the country, the Vietnamese government this year also issued a decision providing a ground-breaking feed-in tariff for power suppliers of up to 10.05 US cents per kilowatt hour. This is more than 25 per cent higher than the 7.8 cent applicable to wind power projects.

Hoa Binh Co bubbles over with V Cola fizzy drink plan

Domestic real estate developer Hoa Binh has ambitious plans to produce a carbonated soft drink to compete with Coca-Cola and Suntory PepsiCo.

The firm will soon put into operation a $39.7 million beer and beverage  factory in the northern province of Bac Ninh’s Tien Son Industrial Park. The new facility will have the annual output of 150 million litres of soft drinks, 20 million litres of beer and 100 million litres purified water.

The V Cola brand will be the first domestically-produced carbonated drink, Nguyen Huu Duong, general director of Hoa Binh told VIR.

Duong said that the new facility would operate the most modern product lines imported from Germany. He believed V Cola retailed at just two thirds of the cost of Coca-Cola or Pepsi would be able to compete with the global drinks giants for their giant share of the domestic market. Coca-Cola and Pepsi occupying about 60 per cent of the Vietnamese beverage market, according to Ministry of Industry and Trade (MoIT).

Domestic companies such as Tribeco did previously attempt to produce carbonated  drinks, but failed to compete with the international heavyweights. However, Duong said that if domestic beverage companies had a proper business strategy, they could successfully develop a foothold in the carbonated drink market.

Hoa Binh, a property developer most well-known for its Hoa Binh Green City took the decision to enter beverage production.

The latest report by London-based Business Monitor International, a leading independent provider of proprietary data, analysis, rankings and forecasting revealed Vietnam’s beverage industry’s business growth during 2013-2017 stood at about 20 per cent due to increasing consumption.

According to the MoIT, the beverage industry has significantly contributed to Vietnam’s economy. To date, the beverage sector accounts for about 15 per cent of the country’s GDP and this is likely to continue increasing.

Vietnam’s beverage market has proved attractive to both domestic and foreign beverage companies, with more money being poured into expansion in the sector.

In August this year, Tan Hiep Phat (THP), one of Vietnam’s leading beverage groups, officially put into operation a $85 million beverage plant in the northern province of Ha Nam’s Kien Khe Industrial Park with the  designed capacity of 300 million litres per year in the first phase, which will expand to 600 million litres per year in the second phase during 2018-2022. The group will continue focusing on its strength in tea with products such as Dr Thanh and Number 1. The group is investing in other plants in Binh Duong, Quang Nam and Hau Giang provinces. Once all are in operation, THP will annually provide around two billion litres of products, Tran Uyen Phuong, deputy general director of THP told VIR.

Phuong said that since it was near to impossible to compete with foreign giants such as Coca-Cola and PepsiCo in the carbonated drinks market, domestic beverage companies have chosen to focus on non-carbonated alternatives.

Coca-Cola also plans to invest additional $300 million in the Vietnamese soft drink market by 2015. Meanwhile, PepsiCo Vietnam formed a joint venture with Japan’s Suntory Holding Ltd in which Suntory would buy a 51 per cent stake in PepsiCo’s Vietnamese beverage business. The company poured $118 million into two beverage plants in Dong Nai and Bac Ninh provinces.

Masan, one of Vietnam’s largest fast moving consumer goods companies, plans to expand its beverage business through buying a beer plant in the central province of Phu Yen, and through promoting its own brands such as Vinacafe and Vinh Hao this year.

Vietnam ranks 32nd among world’s best-performing stock markets

The Vietnamese stock market stood in 32nd place among the world’s 51 best-performing stock markets in 2014, according to a list of 74 stock markets compiled and published by US-based Bespoke Investment Group.

In particular, as of December 23, 2014, the Vietnam stock market index had risen by 6.59 percent from the beginning of the year.

Among 74 global stock markets in 2014, 51 rallied, while 23 were bearish.

In addition, some Southeast Asian countries ranked high in the list of the world’s best-performing stock markets. Specifically, Thailand ranked 11th with a 17.9 percent growth despite internal political turmoil that lasted for several months.

The Philippines ranked 7th (22.01 percent), Indonesia ranked No. 9 (20.24 percent) and Singapore ranked No. 41 (5.21 percent).

Meanwhile, Malaysia fell onto the list of the worst-performing stock markets, down 6.32 percent. The drop of the Malaysian stock market is partly due to the influence of the dual air disasters that hit Malaysia Airlines earlier this year.

Also according to Bespoke, Argentina's stock market rose the sharpest among the world’s best-performing stock markets with an increase of 54.51 percent.

This is perhaps surprising news for investors, because the stock market of the South American country began to fall very sharply from June when it was forced to repay debts to international bondholders, leading to its second insolvency within 13 years.

However, despite the economic plunge, the stock market continues to boom.

Following Argentina's stock market are China and India with an increase of 43.32 percent and 29.93 percent, respectively.

Meanwhile, the United States ranked 17th with an increase of 12.73 percent.

In contrast to Argentina, a severe economic crisis has turned the Russian stock market into the worst-performing stock market in the world with a 44.9 percent reduction.

The plunge in oil prices, the ruble’s value and penalties by the West are said to have had a negative impact on the Russian economy and pushed it to a temporary standstill.

Consumer lending may salvage credit growth target

After seeing very sluggish growth of 4.5 per cent in the first eight months of this year, credit grew by 10.22 per cent as of November 30 from the end of 2013, reported the State Bank of Vietnam (SBV), making the whole-year target of 12-14 per cent now more feasible.

The rise, according to banks, is thanks to consumer lending. “This growth is mostly due to individual customers, who account for more than 50 per cent of banks’ total lending,” said a representative from Sacombank, which saw its total lending rise by 15 per cent in the first 11 months of this year.

According to the source from Sacombank, businesses are still not seeking much capital, despite the fact that this time of the year is generally the hottest time for them to take out loans to fuel their production in preparation for Tet. Meanwhile, as interest rates on home loans continue to go down, alongside falling real estate prices, demand is on the rise. Homebuyers account for 15 per cent of Sacombank’s total retail lending.

“The most common interest rate on loans for homebuyers is currently between 8 and 10 per cent per year, very reasonable compared to two years ago,” said Sacombank deputy general director Nguyen Minh Tam.

At VPBank, consumer lending through its subsidiary financial company FE Credit contributed the majority to the bank’s 34.8 per cent credit growth in the first nine months of 2014, reported the bank’s website. “FE Credit expects an increase of 140-150 per cent in the number of loans by this year-end,” said FE Credit’s acting CEO Kalidas Ghose.

At Techcombank, retail banking accounted for 40 per cent of the bank’s total lending this year, reported acting CEO Do Tuan Anh. Anh said the bank’s solid performance was thanks to its focus on increasing the quality of services and tailoring its products to meet customer demands, particularly those of individual customers. He said that in the near future the bank would continue to boost lending to this segment.

According to banking experts, lending small sums to several customers is safer than lending big sums to a few customers. Also, when money is distributed over several loans, there is more control over the interest margin.

Given this breakthrough in credit growth statistics, the 12-14 per cent credit growth target for this year may well be in sight. However, “credit quality is more important than quantity,” noted banking expert Nguyen Tri Hieu. He added that the government should be realistic in its lending goals and not make credit growth its only focus.

“It’s more important that credit goes into the five prioritised sectors, agriculture and rural areas, exports, supporting industries, small and medium enterprises, and high technology.”

SSI holds over 20 per cent stake in PDN

Saigon Securities Inc (SSI) bought 111,730 shares, with an option to purchase another 615,180 shares, in Dong Nai Port Joint Stock Company (PDN) on December 25 and 26.

Dong Nai Port Joint Stock Company works mostly in transportation and warehousing in the southern province of Dong Nai. - Photo baomoi.com

At the same time, SSI sold 15,000 PDN shares.

Following the transaction, SSI now owns more than 2.47 million shares, or 20.1 per cent of the stake in PDN, which specialises in transportation and warehousing in the southern province of Dong Nai.

With the stock purchase, PDN and SSI became associate companies.

The largest shareholder in PDN is Sonadezi Corporation, with a 51per cent stake.

Previously, SSI has been associated with other eight companies, including Pan Pacific Corporation, Binh Thanh Import - Export Production and Trade JSC, Southern Seed Corporation , Long An Food Processing Export Joint Stock Company, Electronics Communications Technology Investment Development Corporation, Transimex-Saigon Corporation, Bibica Corporation and Viet Nam Fumigation Joint Stock Company.

On December 29, PDN shares closed at VND35,200(US$1.65), while SSI shares ended at VND25.9 ($1.21) on the HCM City Stock Exchange.

Better quality, prices to turn local products into consumers’ first choice

Domestic businesses need to focus on applying cutting-edge technologies to improve their product quality and cut down prices so that made-in-Vietnam products can truly become the first choice of Vietnamese consumers.

So said participants at a workshop held by the Vietnam Private Business Association (VPBA) in Hanoi on December 27.

Duong Duy Hung, Deputy Director General of the Ministry of Industry and Trade (MOIT)’s Domestic Market Department, pointed out to numerous weaknesses of domestic production such as the monotony of product design and diversity, uncompetitive prices, businesses’ neglect of goods promotion and consumer services, the lax connection between manufacturers and sellers, and the slack market watch.

Raising competitiveness must be conducted regularly, continuously and on the long-term base, said VPBA Vice Chairman Ngo Van Diem, adding that Vietnam needs to improve its national competitiveness, build an appropriate development plan, and create a fair competition environment and a favourable business climate.

He suggested the country help enterprises increase their competitiveness while companies also need to partner with one another, abolish the mindset of hunting for short-term profits, and invest more in personnel training.

According to a recent survey on outcomes of the five-year implementation of the campaign “Vietnamese people prioritise the use of Vietnamese goods”, 92 percent of questioned consumers were interested in the drive, 57 percent of them recognised the campaign’s communication efforts, and 63 percent prioritised using domestic products. This survey was carried out by the Party Central Committee’s Commission for Communication and Education.

The amount of textile and garment materials imported from China dropped dramatically to 37 percent, compared to 75-80 percent in the previous years, said a report compiled by the MOIT and the Ministry of Planning and Investment in September.

There is also an increasing trend, especially in cities, that local consumers buy domestically made apparel although smuggled products are dwarfing local ones.

While some foreign brands are dominating the market of formula milk, most of other products such as yogurt and condensed and fresh milk on sale are made by Vietnamese companies like Vinamilk and TH True Milk, the report shows.-

SOE restructuring needs to be hastened in 2015: Deputy PM

Deputy Prime Minister Vu Van Ninh has asked ministries, localities, and businesses to accelerate the restructuring of State-owned enterprises (SOEs) so as to fulfil the plan for the two years of 2014 and 2015.

Ninh, who is also the head of the Steering Committee for Business Renovation and Development, chaired a meeting on SOE restructuring in Hanoi on December 27.

A report at the event read that the SOE restructuring with a focus on economic groups and corporations was speeded up and made considerable progress in 2014.

Among 479 SOEs subject to the restructuring in 2014 and 2015, 143 had been equitised by December 25, while 14 others were merged, three dissolved, three sold, and three filed for bankruptcy.

More than 6.07 trillion VND (about 289.05 million USD) of investment were divested from 233 firms, six times higher from a year earlier, which generated over 8 trillion VND (380.95 million USD) in payment, 1.3 times the face value.

However, the number of equitised businesses and the divested sum were still lower than expected while some policies and mechanisms were not timely issued or amended, the meeting heard.

Officials said in 2015, relevant agencies need to overhaul restructuring measures, complete policies guiding the implementation of the Law on Management and Use of State Capital in Production and Business and the revised Law on Enterprises.

Ministries, localities, and State-owned groups and corporations also need to push qualified enterprises to conduct initial public offering (IPO). Meanwhile, the others will be turn into joint stock companies with shareholders being the State, the State Capital Investment Corporation, trade unions, and employees, among others.

SOE restructuring is part of economic restructuring stated in the National Assembly’s Resolution No.10/2011/QH13 on the socio-economic development plan for 2011 to 2015. Public investment and the banking system are also being restructured.

Jetstar Pacific to launch five more domestic routes

The low-cost carrier Jetstar Pacific will launch five more domestic routes early next year to meet the increasing travel demand and economic exchange between the areas.

On February 1, 2015, the Ho Chi Minh City-Dong Hoi and HCM City-Quy Nhon services will begin with one flight a day and three fights a week, respectively.

On February 2, flights between the central highland city of Buon Ma Thuot and the northern port city of Hai Phong will begin with three times a week, while those between Buon Ma Thuot and the northern central Thanh Hoa province will start on February 2.

The Ho Chi Minh City-Tuy Hoa route will be launched later, on March 30, with three flights a week.

The carrier will use Airbus A320 aircraft for all the five routes.

Beside the domestic routes, the airline also plans to introduce a new daily service between Hanoi and the Thai capital of Bangkok as from March 29 next year.

This is the second route linking Vietnam and Thailand operated by Jetstar Pacific. Previously, the carrier inaugurated its service between Ho Chi Minh City and Bangkok on December 10.

Firms learn promotion regulations

The HCM City Department of Industry and Trade last Friday held a conference to familiarise local companies with the Commercial Law's provisions governing sales promotion and several other aspects of business.

According to a department official, there were 25,000 promotions and sales programmes registered in the city this year, but without supervision to ensure their integrity and transparency.

He spelled out the regulations for promotions.

Those offering freebies, coupons, discounts, and frequent shopper programmes have to send in written applications to provincial or city Trade Services sub-department at least seven working days in advance.

The maximum value of freebies or the maximum discount on goods and services must not exceed 50 per cent of the original.

Discount programmes must not exceed 45 days at a time and 90 days in a year.

Those offering promotions featuring games of chance and lucky draws have to inform the competent government agency in writing about the results within 45 days, and deposit 50 per cent of the value of the prizes that were not won by anyone.

They will also have to publish the results on at least one media outlet and at the business venue.

Violations of any of the rules can attract a penalty of VND25-80 million (US$1,200-3,800) and result in seizure of exhibits.

At the conference held in co-operation with Singaporean business consultant Singapore Standard, officials also held forth on how to avoid unhealthy competition and safeguarding customers' rights.

Tax department collects higher amount than projected in 2014

Tax from crude oil has surpassed its annual target by 18 per cent, amounting to VND101 trillion (US$4.7 billion), as revealed at a conference last Friday.

The General Department of Taxation disclosed that the total tax collection is estimated at VND681 trillion ($32 billion), which is equivalent to 109.1 per cent of the projection. Domestic tax accounts for VND580.1 trillion ($27.3 billion), or 107.1 per cent of the estimated figure.

Tax agencies conducted inspections on more than 67,800 enterprises, collecting VND12.2 trillion ($573 million) to be added to the state's budget in 2014.

The tax sector collected 50 per cent of the tax debt from December 31, 2013. The total tax debt by December 31, 2014, is VND70.2 trillion ($3.3 billion), which indicates an increase of 14.9 per cent compared with last year.

The General Department of Taxation shared that eight provinces increased their tax debt compared with last year (over 30 per cent).

Moreover, eight provinces incurred tax debt from 20 to 30 per cent. Meanwhile, 23 provinces decreased their tax debt compared with last year. Only seven provinces managed to achieve this decline in 2013.

Addressing the conference to review the sector's operations in 2014, Deputy Prime Minister Vu Van Ninh spoke highly of the achievements the sector had attained despite the many difficulties still being faced by the country.

However, he asked that tax inspection be conducted on at least 20 per cent of the 490,000 operating businesses.

In response to the Deputy PM's request, Finance Minister Dinh Tien Dung proposed the rates of 16 per cent, 18 per cent and 20 per cent within three years.

The sector also intensified the reform of administrative procedures and the application of modern technology throughout the year. Nearly 95 per cent of the businesses performed e-tax declarations.

Meanwhile, the time spent on tax procedures fell from 537 hours to 167 hours per year. The sector is striving to reduce it by an additional 45.5 hours.

Mobile World targets $1b revenue in 2015

National mobile phone retail giant The Gioi Di Dong (Mobile World) will introduce hitherto unseen services and products as it strives to reach next year's turnover target of US$1 billion, its chairman Nguyen Duc Tai said yesterday.

The biggest mobile phone retailer in the country also aims at post-tax profits of VND886 billion ($42 million) the next year, Tai told Viet Nam News.

He said that the company had obtained good results in 2014 with estimated revenues of VND15.8 trillion ($752 million) and after-tax profits of VND670 billion ($32 million). These figures mark year-on-year increases of 66 per cent and 159 per cent respectively.

The company also opened 350 new thegioididong.com and dienmay.com outlets this year.

Tai declined to disclose details, but said the company will further improve its service to better tap the high market potential.

"We may introduce services and products that none of the retailers have done before," he said.

An additional 123 outlets will be opened in 2015, helping the company obtain 40 per cent of the market share, he added.

Thai Nguyen achieves record economic growth

The northern province of Thai Nguyen posted economic growth of 18.6 per cent this year, 3 per cent higher than the set target and the highest annual rate ever.

The province also exceeded targets for industrial production and export value, according to the provincial People's Committee. Industrial output was estimated at VND160 trillion (US$7.27 billion), more than triple the yearly goal, while exports earned $8.1 billion, seven times the target.

People's Committee Chairman Duong Ngoc Long attributed the results to the province's work to improve the investment climate and reform administrative procedures,

The acceleration of infrastructure projects for transport, electricity and water supply created favourable conditions for manufacturers based in Thai Nguyen to establish trade and production links with partners in northern economic hubs like Ha Noi, Quang Ninh and Hai Phong, he added.

There were also several major investment projects in the support, mineral processing and technology industries, including the new Samsung hi-tech complex.

High-output industrial products included mobile phones – which accounted for 71 percent of export turnover – as well as garments and textiles, coal, iron and steel products and cement.

In 2015, Thai Nguyen aims to maintain economic growth of 15 per cent and an industrial production value of VND260 trillion ($123 billion).

Local authorities will continue to build infrastructure at industrial parks for support industry projects to serve the Samsung hi-tech complex, in addition to enhancing the province's competitive capacity.

VN sees trade surplus for third year

Viet Nam recorded a trade surplus of roughly US$2 billion in 2014, the General Statistics Office (GSO) reported last Saturday.

This is the third consecutive year that the country saw a surplus, after recording surpluses of $280 million in 2012 and more than $860 million in 2013.

This year, overall export revenues hit $150.42 billion, up 13.6 per cent over last year, while total import values reached $148.58 billion, a year-on-year increase of 12.1 per cent.

According to the GSO, foreign direct investment (FDI) enterprises contributed to the majority of revenues of Viet Nam's key export products. They accounted for 99.6 per cent of $24.83 billion in telephone and component exports, 59.4 per cent of $20.77 billion in garment and textile exports, and 77 per cent of $10.22 billion in footwear exports.

They also represented 89.7 per cent of machinery and equipment exports, which totaled $7.26 billion, and 98.8 per cent of computer and electronic exports, which amounted to $11.66 billion.

In 2014, the structure of exports saw significant changes that benefited the country's goods. The exports of light industrial goods increased 15.9 per cent to nearly $60 billion, farming and forestry products rose by 11.4 per cent to 17.80 billion, while aquatic products were up 17.6 per cent to nearly $8 billion.

Materials for production made up 91.2 per cent of total import values, reaching $135 billion, or a year-on-year increase of 12.5 per cent. Of these, the values of machinery and equipment were $55.60 billion (up 10.1 per cent), petroleum products were $7.62 billion (up 9.3 per cent), and chemical substances were $3.22 billion (up 14.6 per cent).

Further, material imports served production for exports by the FDI sector more than that of domestic enterprises. These imports amounted to $84.57 billion for foreign companies, compared with $63.49 billion for local firms.

The GSO noted that Viet Nam witnessed an increasing deficit in trade with China, while China remained the largest exporter to Viet Nam this year. The deficit for 2014 was $28.90 billion, a rise of 21.8 per cent from the figure recorded in 2013.

Viet Nam's imports from China reached $43.70 billion, up 18.2 per cent year-on-year, while its exports to this market were only $14.8 billion, although crude oil exports increased 76.9 per cent and textile fibre exports rose 40.3 per cent there.

The GSO noted that as the contents of domestically made materials and components in export goods remained low, the three-year high trade surplus of $2 billion resulted in insignificant benefits to the Vietnamese economy.

Quang Ninh signs off on Rent-A-Port IP-port Project

Belgium’s Rent-A-Port and its partners including InfraAsia Investment and International Port Engineering Management last week received an investment certificate for developing a port and industrial park complex in Quang Ninh province.

The $128 million Tien Phong Industrial Park development covers 487 hectares in the Mac Dynasty Lagoon area in Quang Yen district. According to local authorities, the developers plan to start construction  next year.

This is the third industrial park project that these companies have developed, and it follows in the footsteps of their successful Dinh Vu Industrial Park and Haiphong International Gateway Port Industrial Park in Haiphong city.

The new project wants to capitalise on growing Japanese, South Korean, and European inward investment.

Rent-A-Port and its partners undertook a feasibility study of the project in 2013, and in April Rent-A-Port and consultancy and engineering firm Ecorem submitted their proposal for a site covering 3,710 hectares. Accordingly, the first phase will be carried out from 2016 to 2020, with a total investment cost of $412 million.

Although Rent-A-Port intended to develop the first phase of the industrial land and logistic complex across 1,000 hectares, Quang Ninh was only prepared to offer 500 hectares in the Mac Dynasty Lagoon.

Rent-A-Port and InfraAsia – in association with Belgim International Port Engineering & Management – started investing in Dinh Vu industrial park in 1997. The first phase of this project is entirely occupied and the developer is developing phase 2 on a 377-hectare site.

According to Rent-A-Port, nearly 50 per cent of phase 2 is already occupied. So far, the industrial zone has attracted 53 projects with a total investment of approximately $3 billion. Foreign investors in the zone include Bridgestone, Shin-etsu, Chevron, Toyota Tsusho, JX Nippon and Indemisu.

Positioned on the border of southern China’s Guangxi province, and bordering Vietnam’s Lang Son, Bac Giang, Haiphong and Hai Duong, Quang Ninh is emerging as the third economic hub in the north of Vietnam, after Hanoi and Haiphong. It is also home to the nation’s largest coal mine. The province is already home to 11 industrial parks and two economic zones. In addition, the government is preparing to establish a special economic zone in the province in order to boost economic growth in the region.

Thailand’s Amata Corporation is also awaiting a government response to its proposal to build a $2 billion hi-tech park and township complex in Quang Yen district.

Financial commission believes 6.2% GDP growth feasible next year

The National Financial Supervisory Commission said that the target of 6.2 percent Gross Domestic Product (GDP) growth rate next year is feasible in a socioeconomic report announced yesterday.

According to the report, GDP growth will be advantageous in 2015. Aggregate demand will recover and purchasing power will improve thanks to low inflation rate in 2014.

Private investment will look up because of better macroeconomic environment together with institution reforms.

Foreign Direct Investment (FDI) attraction will further increase with prospects from the Trans-Pacific Partnership Agreement that will be signed in 2015.

Aggregate supply will be better thanks to economic restructuring. The world’s commodity price reduction will create conditions for businesses to cut down production costs and increase domestic supply sources.

The commission predicts that domestic cost price will drop 3 percent after calculating the ratio of petrol product value per total industrial value. The prediction is also based on a 33 percent drop forecast in the world crude oil price. Domestic petrol price is supposed to reduce the same rate.

According to the commission, inflation will not fluctuate much because the aggregate demand is expected to improve at a reasonable level and not cause pressure on inflation. Core inflation will swing around 3 percent.

HCM City tries to keep goods prices unchanged in coming Tet

Ho Chi Minh City will keep the prices of subsidized products unchanged in two months before and after Tet holidays, from January 10 to March 10, city’s trade officials said in a meeting on price stabilization program for the lunar New Year Festival.

Goods supply for the price subsidization program is abundant at markets in HCMC (Photo: SGGP)

Deputy Director of the Industry and Trade Department Le Ngoc Dao said that the subsidization program covers nine necessary items. HCMC will focus on the supply of pork, poultry, chicken and vegetables to ensure their prices will not change as goods demand surges during Tet holidays.

The total value of goods that businesses have prepared for two months before and after the Tet holidays is VND15,849 billion (US$741 million), an increase of 109 percent over the same period last year. Of these, VND8,304 billion has been spent on subsidized goods’ stockpiling, up 69.4 percent over last year.

Authorized agencies forecast that purchasing power in the coming Tet holidays will increase from 10-20 percent against the same period last year. HCMC and provinces have signed an agreement to connect goods supply and demand to stabilize the market in the holidays and 2015 also.

At the meeting most businesses said goods preparation advantageous thanks to fine weather conditions and the down-trend of input material prices.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR